Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.

 

 

Deere in the Headlights
 
Originally published at 7:45 a.m. EST on February 19, 2016
 

Deere  (DE) has pulled a Caterpillar  (CAT) this morning and issued dramatically lowers guidance.

Position: Short CAT
 


 

Apple's Tim Cook Is a Hypocrite!

  
Originally published at 9:54 a.m. EST on February 19, 2016


 "Ty Cobb was a famous baseball player. Infamous, really. He set 90 Major League Baseball records, some of which continue today. He was skillful but also mean; he had a reputation for playing dirty. Cobb was known for spiking other players: sharpening his cleats and sliding into them. Nobody much liked playing against him.

Apple is the Ty Cobb of corporate America. Like Cobb, Apple has set some impressive records. Nine years, a trillion dollars in sales, and almost no taxes paid. Apple risks having a legacy of tainted success and isolation."

-- Andrew Zatlin, When Will Apple Stop Screwing the U.S. Economy?, Moneyball Economics (April 28, 2015)

Apple (AAPL)  last week announced that it's fighting a federal court order requiring the firm to help investigators break into the iPhone of one of the San Bernardino shooters.

Apple's line in the sand against the government was more than a year in the making. But Tuesday, AAPL took the fight public with an open letter from CEO Tim Cook.

Cook wrote: "We feel we must speak up in the face of what we see as an overreach by the U.S. government. ... Ultimately, we fear that this demand would undermine the very freedoms and liberty our government is meant to protect."

And he concluded the letter by saying: "If you place any value on civil liberties, you don't do what law enforcement is asking."

Apple co-founder Steve Wozniak also defended Cook on CNBC Thursday.

But before anyone makes too much of this principled stand, remember that like Ty Cobb, Apple usually plays dirty:

  • AAPL dodges taxes every which way possible (Click here and here for details.)
  • Apple claims to support higher U.S. wages and the ethical treatment of workers, but allegedly uses Chinese sweatshop labor that's paid well below minimum wage and is literally worked to death (some employees have reportedly committed suicide). You can find specifics here and here.
  • The company scrapes Lord knows what kind of private usage information off of customers' products.
  • Apple routinely screws consumers by forcing new proprietary upgrades on their accessories.
  • AAPL generally charges through the nose for its products. Because it can.

Yet now, we're supposed to believe that Apple wants to stand up for the little guy? Even if the tech giant does have a point in this case, Apple is the last firm that should be acting like it has a social conscience and is championing the public good.

As I noted Wednesday, this controversy has -- not surprisingly -- deflected the media from a broader discussion about Apple becoming a mature company whose best days are behind it. That might be why Carl Icahn, Greenlight's David Einhorn and other large hedge-hoggers have quietly dumped a portion of their AAPL shares after touting their accumulation of the stock for years.

As I wrote on Wednesday:

"Carl Icahn has often described his investment in Apple as a 'no brainer,' and the business media have spent perhaps hundreds of hours discussing his and other hedge funds' accumulation of Apple shares.

Business TV has devoted entire programs to the subject, highlighting interviews with Icahn and others. I'm sure the media hoopla that surrounded Icahn's Apple accumulation (not to mention his optimistic tweets on the subject) raised the animal spirits and influenced many investors to buy AAPL over the last few years. ...

(But) it's a bit bewildering that there's been nary a word or discussion so far about news that Icahn and Greenlight Capital recently disposed of a meaningful amount of their Apple shares. Indeed, nearly all the Apple-related discussion since Icahn's 13F filing disclosed the sale of 7 million AAPL shares has been about the U.S. government's attempts to unlock the San Bernardino killer's iPhone.

Personally, I've consistently argued to short or avoid Apple shares since early 2015. ... At the core of my ursine outlook is that Apple's past success represents the greatest headwind to its forward advancement. It's just too difficult for such a large company to 'move the needle' by innovation and the introduction of new products.

Frankly, the successes of Apple's past product offerings are nearly impossible to repeat. Not only is it terribly hard to measurably impact incremental growth on a company with $233 billion of sales, but I believe the iPhone -- Apple's key driver to profits -- is currently concluding its most important product-cycle upgrade."

-- Doug's Daily Diary, How Do You Like Them Apples, Carl? (Feb. 17, 2016)

The Bottom Line
In its fight with the U.S. government, Apple has once again adopted a position that coincides with its economic interests.

From my perch, AAPL's "defense of the public" is hypocritical -- and a contradiction of terms given the firm's long history of what I see as tax avoidance, mistreatment of employees and customers and more.

Position: Short AAPL
 
At the time of publication, Kass and/or his funds were short AAPL and CAT, although holdings can change at any time.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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